South Korea said on Thursday it plans to ban trading of cryptocurrency, including the popular bitcoin.
The announcement sent bitcoin prices much lower and created unrest in the cryptocurrency market.
Justice Minister Park Sang-ki said the government was preparing a bill to ban trading of the virtual money on South Korean currency exchanges.
He said, “There are great concerns regarding virtual currencies and the justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges.”
The price of bitcoin in South Korea dropped as much as 21 percent immediately after the minister’s comments.
Around the world, one bitcoin was valued at about $14,000 on Thursday, January 11. Over the past year, the price moved from less than $1,000 in January 2017 to a high of $19,000 last month.
Bitcoin is different from national currencies, which are supported by governments and national banks. It is stored as a line of computer code. It is not printed on paper or something you can hold.
Bitcoin is similar to real money because you can spend it without using your real identity, as you do with a credit card. People who want to buy and sell things anonymously like bitcoin.
Exchanges of bitcoin in South Korea
By Thursday afternoon, more than 55,000 South Koreans called on the government to stop the proposed ban.
After the price drop, the South Korean president’s office said a ban on cryptocurrency exchanges had yet to be finalized. It said the ban was one of the measures being considered.
A press official at the justice ministry said the proposed ban on cryptocurrency trading came after “enough discussion” with finance ministry and financial officials.
Once a bill is written, legislation for a ban of virtual coin trading still requires a majority of the vote in the National Assembly. It is a process that could take months or even years.
Mun Chong-hyun, chief analyst at EST Security, told Reuters the ban “will make trading difficult here, but not impossible.”
Mun added, “Keen traders, especially hackers, will find it tough to cash out their gains from virtual coin investments in Korea but they can go overseas, for example, Japan.”
Park Nok-sun is a cryptocurrency expert at NH Investment & Securities. Park said “Some officials are pushing for stronger and stronger regulations because they only see more (investors) jumping in, not out.”
South Korean officials are worried that the rising value has fueled huge demand for cryptocurrency in the country. They fear college students and housewives are hoping to get rich quick by investing. They likened it to a game of chance.
The news of South Korea’s proposed ban came as governments around the world are looking to control the trading of cryptocurrencies.
I’m Jonathan Evans.
The Reuters news agency reported this story. Hai Do adapted the report for Learning English. George Grow was the editor. Write to us in the Comments Section or on our Facebook page.
Words in This Story
cryptocurrency - n. money that only exists electronically
virtual - adj. existing or occurring on computers or on the internet
anonymously - adv. not named or identified
analyst - n. a person who study or analyze something
hacker - n. a person who secretly gets access to a computer system in order to get information, cause damage, etc.